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Metro Brands Ltd IPO

Closed RHP

IPO Details

  • Open Date 10-Dec-21
  • Close Date 14-Dec-21
  • Lot Size 30
  • IPO Size ₹ 1,367.51 Cr Cr
  • IPO Price Range ₹ 485 to ₹500
  • Min Investment ₹ 14,550
  • Listing Exchange NSE, BSE
  • Basis of Allotment 17-Dec-21
  • Refunds 20-Dec-21
  • Credit to Demat Account 21-Dec-21
  • Listing Date 22-Dec-21

Metro Brands Ltd IPO Subscription Status

 

Category Subscription Status
Qualified Institutional (QIB) 8.49 Times
Non-Institutional (NII) 3.02 Times
Retail Individual 1.13 Times
Total 3.64 Times


Metro Brands Ltd IPO Subscription Details (Day by Day)

Date QIB NII Retail TOTAL
December 10, 2021 17:00 0.00x 0.02x 0.52x 0.27x
December 13, 2021 17:00 0.16x 0.17x 0.87x 0.52x
December 14, 2021 17:00 8.49x 3.02x 1.13x 3.64x

IPO Synopsis

The Metro Brands IPO opens for subscription between December 10 and December 14 with the listing date set as December 22, 2021. The price band of the issue is to be announced by the company next week. The IPO consists of a fresh issue of Rs.295 crore and an offer for sale of up to 21,900,100 equity shares. The company has taken part in a private placement of 73,136 equity shares for Rs.3.29 crore. 
The book running lead managers to the issue are Axis Capital, Ambit Pvt Ltd, DAM Capital Advisors, Equirus Capital Pvt Ltd, ICICI Securities Ltd and Motilal Oswal Investment Advisors Ltd. The company promoters are Rafique A Malik, Farah Malik Bhanji, Alisha Rafique Malik, Rafique Malik family trust and Aziza Malik family trust. Among the shareholders, Rakesh Jhunjhunwala’s wife, Rekha Jhunjhunwala, holds 14.73% and is the third largest shareholder in the company. The promoter and promoter group owns 83.99% stake in the company. 

 

Objectives of the issue:
The company wants to utilize the net proceeds to open new stores under the brand names- Metro, Mochi, Walkway and Crocs. Rs.188.05 crore is to be kept aside for this purpose. 

About Metro Brands Ltd

Metro started its operations in 1955 with one store in Mumbai and they have since developed into a one stop shop for all kinds of footwear required by all ages. They offer a wide range of products for the whole family, for different occasions. The target market of the company is the mid level and premium footwear segment, which is an organized sector in the footwear market. Some of the famous brands of this company include Metro, Mochi, Walkway, Da Vinchi and J Fontini. They also have third party brands like Crocs, Skechers, Clarks, Florsheim and Flitflop. Along with footwear, Metro also offers products like bags, socks and masks for sale at their stores. They operate through their Multi Brand Outlets and Exclusive Brand Outlets. 

The company has 598 stores across 136 cities, spread across 30 states and union territories of the country, as of 30 September 2021. This is a significant increase from the 504 stores in 116 cities as on 31 March, 2019. The company has opened 113 new MBOs and 98 new EBOs in the last three years. In FY19, FY20 and FY21, Metro Brands operated in stores with a retail business area of 643,442 sq ft, 694,955 sq ft and 720,994 sq ft respectively. 

The company has a very customer centric loyalty program called including Club Metro, My Mochi and Crocs Club. Club Metro has 4.85 million members as of FY21, My Mochi has 3.29 million members in FY21. The Crocs Club membership was launched very recently in FY20 and has a current membership of 0.45 million. 

Particulars

(In Rs cr)

FY21

FY20

FY19

Revenue

800.05

1,285.16

1,217.06

PAT

64.61

160.57

152.73

EBITDA Margin

21.36%

27.51%

27.72%

EPS

2.43

6.05

5.75

ROCE

9.54%

20.07%

25.89%

ROE

7.63%

19.33%

22.82%

 

Particulars

(In Rs cr)

FY21

FY20

FY19

Total Assets

1,659.34

1,617.42

1,321.50

Total Borrowings

1.406

11.58

9.89

Equity Share Capital

132.76

132.76

132.76

 

Peer Comparison (FY 20)

Company

Operating Revenue

(In Rs bn)

Operating Margin (%)

Net Profit Margin (%)

ROE%

ROCE%

Bata India Ltd

30.6

27.70%

10.80%

18.10%

36.20%

Relaxo Footwear

24.1

17.30%

9.40%

19.80%

24.90%

Paragon Group

16.3

7.40%

3.20%

19.30%

17.50%

Mirza International

12.6

13.60%

3.60%

7.40%

10.20%

Metro Brands

12.9

27.80%

12.50%

21.00%

33.50%

Khadim India

7.7

4.50%

-4.00%

-12.00%

0.40%

Liberty Shoes

6.5

9.30%

1.70%

8.20%

12.80%

Campus Activewear Pvt Ltd

6.3

11.70%

9.50%

23.00%

25.50%


Key Points of Metro Brands Ltd. 

IPO Key Points

  • Strengths:

    1. Metro Brands is one of the largest footwear companies in the country with a pan-India presence. They have third highest number of retail stores in India, as of FY21
    2. The customer loyalty to the brand is very strong as Metro Brands have products for every occasion, for the whole family. Along with footwear, they also provide accessories across 10 self owned brand and 25 third party brands
    3. The company has a good and long standing relationship of over two decades, with all its vendors. In FY21, the company dealt with 250 vendors for the products
    4. It is the partner of choice for third party brands who are looking to expand their operations in India. The company got into an agreement with Crocs in 2015 and in the last three fiscal years they have opened 98 Croc EBOs
     

  • Risks:

    1. If the company cannot anticipate the demand of the customers and runs out of inventory or a surplus of inventory remains, it will impact the stores’ operations. It is very important to gauge the customers demands efficiently so as to determine the amount of inventory to be kept in hand
    2. The company needs to keep an eye out and promptly identify any new trends or preferences of the customers, and act on it immediately
    3. The footfall could be affected by any negative perception of the people about the brand or the lack of awareness regarding the brand
    4. The stores and warehouses operated by the company are leased and if the company fails to pay the owners or the costs increase beyond the company’s capacity to pay, it will materially affect the company’s business and operations

Valuation and Recommendation

 

Taking into consideration the upper price band of Rs.500 per share, the company is demanding a Price to Sales ratio of 16.97x the revenue in FY21 and a PE multiple of 205.8x, based on the earnings in FY21. These high valuation numbers are mainly because of the slowdown that the business witnessed due to the pandemic. On a positive note, the growth potential of the retail sector, the wide array of brands under Metro Brands Ltd and an asset light business model along with efficient operating plans and plans for expansion, supports our “Subscribe” recommendation for Metro Brands ltd, with a long term perspective. 

Valuation and Recommendation

How to apply for IPO?

  • Login to your 5paisa account and select the issue in the current IPO section

  • Enter the number of lots and price at which you wish to apply for

  • Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange

  • You will receive a mandate notification to block funds in your UPI app

  • Approve the mandate request on your UPI and funds will be blocked

Contact Details of Metro Brands Ltd IPO

Contact Information

Metro Brands Limited

401, Zillion, 4th Floor,
LBS Marg & CST Road Junction, Kurla (West),
Mumbai- 400 070, Maharashtra, India
Phone: + (91) 22 2654 7700
Email: investor.relations@metrobrands.com
Website: https://metrobrands.com/

Metro Brands Ltd IPO Register

Link Intime India Private Ltd

Phone: +91-22-4918 6270
Email: metrobrands.ipo@linkintime.co.in
Website: https://linkintime.co.in/

Metro Brands Ltd IPO Lead Manager

Ambit Private Limited
Axis Capital Limited
DAM Capital Advisors Ltd (Formerly IDFC Securities Ltd)
Equirus Capital Private Limited
ICICI Securities Limited
Motilal Oswal Investment Advisors Pvt Ltd